Notes to accounts

Note 1 Accounting Principles

 

1.1 Basis for preparation
SpareBank1 Boligkreditt AS quarterly accounts have been prepared in accordance with the International Financial Standards (IFRS). The accounts have been produced in accordance with IAS 34 reporting for a partial year. The Company’s accounting principles and calculation methods have not materially changed since the annual accounts for 2019. IFRS 16- Leases have been adopted from 1 January 2019. This standard do not have any significant impacts for SPB1 Boligkreditt AS.

The presentation currency is Norwegian Kroner (NOK), which is also the Company’s functional currency. All amounts are given in NOK thousand unless otherwise stated.

The interim financial statements are not audited.

1.2 Segments
The Company has only one segment, which is the mortage lending to reail custoomers. The segment consists of lending to private individuals and all loans have been acquired from the member banks of the SpareBank 1 alliance.

1.3 Estimates and assessments regarding the use of accounting principles
The preparation of the financial information is in accordance with IFRS and involves management’s estimates which affect the implementation of accounting principles and thereby accounting values for assets, liabilities, revenue and costs. These estimates have been described in the notes to the annual accounts for 2019.


Note 2 Net Interest Income

NOK 1 000         31.03.2020 31.03.2019 2019
Interest income              
Interest income from, certificates, bonds and deposits         65,423 29,304 280,846
Interest income from residential mortgage loans         1,565,974 1,258,633 5,553,510
Total interest income         1,631,398 1,287,936 5,834,356
               
Interest expense              
Interest expense and similar expenses to credit institutions         8,332 -25,124 -45,148
Interest expense and similar expenses on issued bonds         1,115,603 851,193 3,903,694
Interest expense and similar expenses on subordinated debt         12,808 12,165 48,356
Recovery and Resolution Fund *         12,550   -
Other interest expenses         2,458 2,155 51,406
Total interest expense         1,151,751 840,389 3,958,307
               
Net interest income         479,646 447,547 1,876,048
 

 

* From 2019, SPB1 Boligkreditt has been incorporated into the Norwegian Bank Recovery and Resolution Fund.

 


Note 3 Net Gains from Financial Instruments

NOK 1 000         31.03.2020 31.03.2019 2019
Net gains (losses) from financial liabilities (1)         -5,423,471 -2,566,964 -6,958,008
Net gains (losses) from financial derivatives, hedging liabilities, at fair value, hedging instrument (1,3)         3,870,659 2,868,452 6,990,649
Net gains (losses) from financial assets (2)         1,297,123 -316,984 -272,077
Net gains (losses) from financial derivatives, hedging assets, at fair value, hedging instrument (2,3)         -28,098 30,886 68,140
Net gains (losses)         -283,788 15,390 -171,295
 

(1) The Company utilizes hedge accounting as defined in IFRS for issued fixed rate bonds (covered bonds) with derivatives (swaps) which hedges fixed rates to floating and foreign currencies to Norwegian kroner. The hedges are individually tailored to each issued bond and exactly matches the cash flows and duration of the issued bonds. Some liabilities in foreign currency are hedged with natural hedges (corresponding assets in the same currency) and this may cause the valuation differences between assets and liabilities. There may also be valuation differences between liabilities and hedges due to the the amortization of issuance costs and bonds issued at or below par value.

(2) SpareBank 1 Boligkreditt AS manages its liquidity risk by refinancing its outstanding bonds ahead of expected maturities and keeping proceeds as a liquidity portfolio. The majority of this portfolio is valued according to observed market values (fair value). Fixed rate bonds and bonds in other currencies than Norwegian kroner are hedged using swaps. These positions are valued at fair value though differences may occur because the valuation of the bonds include a credit risk/spread element which the swaps do not contain. Included in assets in the table are also investments which are hedged with natural currency hedges, as well as investments in short term, highly rated bonds from funds received from swap counterparties for collateral purposes. Such investments do not have a corresponding value change in swap hegdes

(3) All derivatives are valued at fair value according to changes in market interest rates and foreign exchange rates. Changes in valuations from the previous period is accounted for in profit and loss.


Note 4 Salaries and Remuneration

NOK 1 000           31.03.2020 31.03.2019 2019
Salary           2,925 2,518 9,682
Salaries reinvoiced to SpareBank1 Næringskreditt*           -944 -709 -2,772
Pension expenses           551 513 1,727
Social insurance fees           552 458 2,536
Other personnel expenses           70 54 606
Total salary expenses           3,154 2,835 11,780
                 
Average number of full time equivalents (FTEs)           7 6 7
 

 

* The company’s employees have shared employment between SpareBank 1 Næringskreditt and SpareBank 1 Boligkreditt. All remuneration is effectuated through SpareBank 1 Boligkreditt and a portion is reinvoiced to SpareBank 1 Næringskreditt. The company also buys administrative services from SpareBank 1 SMN and SpareBank 1 Gruppen. Pension benefit obligations are covered in SpareBank 1 Boligkreditt through participation in the pension fund of SpareBank 1 SMN. This pension scheme meets the legal demands on mandatory occupational pension.

 

Note 5 Other Operating Expenses

NOK 1 000         31.03.2020 31.03.2019 2019
IT and IT operations         3,280 2,678 11,775
Purchased services other than IT         2,848 2,363 10,159
Other Operating Expenses         577 220 2,097
Depreciation on fixed assets and other intangible assets         89 82 328
Total         6,794 5,344 24,359
 

Note 6 Other Assets

NOK 1 000         31.03.2020 31.03.2019 2019
Intangible assets         297 625 379
Fixed assets         377    
Account receivables from SpareBank 1 Næringskreditt AS         1,146 621 499
Other         11 555 12
Total         1,831 1,801 890
 

Note 7 Residential mortage loans

Lending to customers are residential mortgages only. The mortgages generally have a low loan-to-value and losses have been very low. The total amount of lending to customers at the end of 31.03.2020 were NOK 199,6 billion. All mortgages carry a variable interest rate.

NOK 1 000         31.03.2020 31.03.2019 2019
Revolving loans - retail market         43,720,736 45,215,673 42,431,353
Amortising loans - retail market         155,754,047 142,772,983 148,660,350
Accrued interest         233,652 197,973 229,402
Total loans before specified and unspecified loss provisions         199,708,435 188,186,629 191,321,105
               
Stage 1         192,182,539 181,894,510 183,557,607
Stage2         7,525,896 6,292,119 7,763,498
Stage 3         - - -
Gross loans         199,708,435 188,186,629 191,321,105
               
Impairments on groups of loans              
Expected credit loss, stage 1         1,255 1,712 1,068
Expected credit loss, stage 2, no objective proof of loss         19,725 13,120 10,695
Expected credit loss, stage 3, objective proof of loss         -   -
Total net loans and claims with customers         199,687,454 188,171,797 191,309,342
               
Liability              
Unused balances under customer revolving credit lines (flexible loans)         12,536,488 12,444,482 12,028,316
Total         12,536,488 12,444,482 12,028,316
               
Defaulted loans              
Defaults*         0.0 % 0.0 % 0.0 %
Specified loan loss provisions         0.0 % 0.0 % 0.0 %
Net defaulted loans         0.0 % 0.0 % 0.0 %
               
Loans at risk of loss              
Loans not defaulted but at risk of loss         0.0 % 0.0 % 0.0 %
- Write downs on loans at risk of loss         0.0 % 0.0 % 0.0 %
Net other loans at risk of loss         0.0 % 0.0 % 0.0 %
 

 

*The entire customer loan balance is considered to be in default and will be included in overviews of defaulted loans when overdue instalments and interest payments are not received within 90 days or if credit limits on revolving loans are exceeded for 90 days or more.

 


Note 8 Share Capital and Shareholder Information

            List of shareholders as of 2020
            No of Shares in per cent Share of votes
SpareBank 1 Østlandet           16,961,710 22.29 % 22.29 %
SpareBank 1 SMN           15,898,802 20.89 % 20.89 %
SpareBank 1 Nord-Norge           14,190,446 18.65 % 18.65 %
BN Bank ASA           5,126,131 6.74 % 6.74 %
SpareBank 1 BV           4,776,009 6.28 % 6.28 %
Sparebanken Telemark           3,592,816 4.72 % 4.72 %
SpareBank 1 Ringerike Hadeland           3,486,683 4.58 % 4.58 %
SpareBank 1 Østfold Akershus           3,439,512 4.52 % 4.52 %
SpareBank 1 Nordvest           1,709,929 2.25 % 2.25 %
SpareBank 1 SR-Bank ASA           1,679,661 2.21 % 2.21 %
SpareBank 1 Modum           1,592,003 2.09 % 2.09 %
SpareBank 1 Søre Sunnmøre           1,023,992 1.35 % 1.35 %
SpareBank 1 Gudbrandsdal           1,012,200 1.33 % 1.33 %
SpareBank 1 Hallingdal Valdres           982,718 1.29 % 1.29 %
SpareBank 1 Lom og Skjåk           632,870 0.83 % 0.83 %
Total           76,105,482 100 % 100 %
 

 

The share capital consists of 76 105 482 shares with a nominal value of NOK 100

 

Hybrid capital

NOK 1000   ISIN Interest rate Issued year Call option 31.03.2020 31.03.2019 2019
Perpetual                
Hybrid (Tier 1 capital instrument)   NO0010713746 3M Nibor + 310 bp 2014 09.05.2019   - -
Hybrid (Tier 1 capital instrument)   NO0010745920 3M Nibor + 360 bp 2015 23.09.2020 300,000 300,000 300,000
Hybrid (Tier 1 capital instrument)   NO0010746191 3M Nibor + 360 bp 2015 29.09.2020 180,000 180,000 180,000
Hybrid (Tier 1 capital instrument)   NO0010767643 3M Nibor + 360 bp 2016 22.06.2021 250,000 250,000 250,000
Hybrid (Tier 1 capital instrument)   NO0010811318 3M Nibor + 310 bp 2017 01.12.2022 100,000 100,000 100,000
Hybrid (Tier 1 capital instrument)   NO0010850621 3M Nibor + 340 bp 2019 30.04.2024 350,000 350,000 350,000
Book value           1,180,000 1,180,000 1,180,000

 

The issued bonds listed in the table abowe have status as Tier 1 capital instruments in the Company's capital coverage ratio.

 

 

Note 9 Liabilities incurred by issuing Securities

NOK 1 000           Nominal value* 31.03.2020 Nominal value* 31.03.2019 Nominal value* 2019
Senior unsecured bonds           - 104,000 -
Repurchased senior unsecured bonds           -   -
Covered bonds           203,483,439 189,901,982 201,758,203
Repurchased Covered bonds           -2,900,000   -
Total debt incurred by issuing securities           200,583,439 190,005,982 201,758,203
 

 

* Nominal value is incurred debt at exchange rates (EUR/NOK and USD/NOK) at the time of issuance

 

NOK 1 000           Book value 31.03.2020 Book value 31.03.2019 Book value 2019
Senior unsecured bonds           - 104,000 -
Repurchased senior unsecured bonds           -   -
Covered bonds           241,829,641 206,499,842 216,579,429
Repurchased covered bonds           -2,900,000   -
Activated costs incurred by issuing debt           -202,691 -191,373 -184,635
Accrued interest           1,085,079 1,034,805 1,275,284
Total debt incurred by issuing securities           239,812,029 207,447,274 217,670,078
 

 

Liabilities categorized by debt instrument and year of maturity (nominal value*, net of repurchased bonds) NOK 1,000:

 

Senior Unsecured Bonds and notes

Due in   31.03.2020 31.03.2019 2019
2018   -   -
2019   - 104,000 -
Total   - 104,000 -
 

Covered bonds

Due in   31.03.2020 31.03.2019 2019
2019   - 14,628,056 -
2020   8,461,000 24,963,500 20,035,500
2021   29,123,936 28,857,334 28,881,382
2022   41,349,200 38,749,200 38,749,200
2023   30,777,750 30,314,900 30,356,650
2024   24,232,723 13,873,539 23,451,428
2025   15,898,750 10,648,750 10,648,750
2026   22,710,000 12,185,000 22,210,000
2027   706,730 669,702 673,042
2028   2,712,800 2,562,800 2,562,800
2029   24,368,050 12,206,700 23,946,950
2038   242,500 242,500 242,500
Total   200,583,439 189,901,982 201,758,203
         
Total   200,583,439 190,005,982 201,758,203
 

 

* Nominal value is incurred debt at exchange rates (EUR/NOK, USD/NOK, SEK/NOK and GBP/NOK) at the time of issuance

 

Debt incurred by currency (book values at the end of the period)

NOK 1 000           31.03.2020 31.03.2019 2019
NOK           66,837,851 60,898,229 59,978,539
EUR           162,837,648 127,027,740 148,733,048
USD           - 10,748,275 0
GBP           9,856,979 8,518,367 8,706,679
SEK           279,551 254,663 251,812
Total           239,812,029 207,447,274 217,670,078
 

Note 10 Subordinated Debt

>
NOK 1000 ISIN Interest rate Issued year Call option from Maturity Nominal amount 31.03.2020 31.03.2019 2019
With maturity                  
Subordinated debt (Tier 2 capital instrument) NO0010704109 3M Nibor + 225 bp 2014 07.03.2019 07.03.2024 475,000 -   -
Subordinated debt (Tier 2 capital instrument) NO0010826696 3M Nibor + 153 bp 2018 22.06.2023 22.06.2028 250,000 250,000 250,000 250,000
Subordinated debt (Tier 2 capital instrument) NO0010833908 3M Nibor + 180 bp 2018 08.10.2025 08.10.2030 400,000 400,000 400,000 400,000
Subordinated debt (Tier 2 capital instrument) NO0010835408 3M Nibor + 167 bp 2018 02.11.2023 02.11.2028 475,000 475,000 475,000 475,000
Subordinated debt (Tier 2 capital instrument) NO0010842222 3M Nibor + 192 bp 2019 24.01.2024 24.01.2029 300,000 300,000 300,000 300,000
Accrued interest             8,354 6,965 8,439
Book value             1,433,354 1,431,965 1,433,439
 

 

The issued bonds listed in the table above have status as Tier 2 capital instruments in the Company's capital coverage ratio.

 


Note 11 Financial Derivatives

NOK 1 000           31.03.2020 31.03.2019 2019
Interest rate derivative contracts                
Interest rate swaps                
Nominal amount           61,666,676 63,762,456 55,698,553
Asset           2,955,710 2,302,857 2,067,884
Liability           -279,216 -388,176 -332,246
Currency derivative contracts                
Currency swaps                
Nominal amount           158,076,919 134,876,663 145,222,180
Asset           35,944,833 15,144,499 14,186,570
Liability           - -35,301 -542,709
                 
Total financial derivative contracts                
Nominal amount           219,743,595 198,639,118 200,920,732
Asset           38,900,544 17,447,357 16,254,454
Liability           -279,216 -423,477 -874,955
 

 

All derivative contracts exist for the purpose of hedging changes in interest rates and currency exchange rates.

 

* Change due to basis swap spread adjustment           31.03.2020 31.03.2019 2019
Asset/Liability           -279,216 -423,477 -874,955
Net gain (loss) on valuation adjustment of basisswap spreads           441,652 -625,286 -545,419
Net asset (+) / liability (-) derivatives           162,436 -1,048,763 -1,420,374
 

 

Basis swaps are currency swaps and are entered into at a certain cost (spread) between SpareBank 1 Boligkreditt and banks which offer such swaps and which have signed an ISDA agreement with the Company. Changes in the cost are valued each quarter across all of the Company's swaps in accordance with the IFRS rules. An increase in the cost would result in an increase in the value of the basisswaps while a cost decrease would reduce the value of the basis swaps. The effect may be material from quarter to quarter because the Company's portfolio of swaps is extensive. All basisswap value changes will reverse over time towards the point of termination of the swaps. Changes in basis swap valuations are not included in net income, but is included in other comprehensive income and in equity

 


Note 12 Classification of Financial Instruments

NOK 1 000     Financial instruments accounted for at fair value * Financial assets and debt accounted for at amortised cost Non-financial assets and liabilities 31.03.2020
             
Assets            
Lending to and deposits with credit institutions     - 4,471,962 - 4,471,962
Certificates and bonds     38,793,444 - - 38,793,444
Residential mortgage loans     - 199,687,454 - 199,687,454
Financial derivatives     38,900,544 - - 38,900,544
Defered tax asset     - - 233,644 233,644
Other assets     - - 1,831 1,831
Total Assets     77,693,988 204,159,416 235,474 282,088,878
             
Liabilities            
Debt incurred by issuing securities     194,190,779 45,621,250 - 239,812,029
Collateral received in relation to financial derivatives     - 27,484,900 - 27,484,900
Repurchase agreement     - - - -
Financial derivatives     723,758 - - 723,758
Deferred taxes     - - - -
Taxes payable     - - 230,533 230,533
Subordinated dept     - 1,433,354 - 1,433,354
Other liabilities     - - 284,635 284,635
Total Liabilities     194,914,536 74,539,504 515,169 269,969,209
             
Total Equity     - 1,180,000 10,939,669 12,119,669
             
Total Liabilities and Equity     194,914,536 75,719,504 11,454,837 282,088,878
 

 

*Fair value calculation according to changes in market interest rates and currencies exchange rates

 

NOK 1 000     Financial instruments accounted for at fair value * Financial assets and debt accounted for at amortised cost Non-financial assets and liabilities 31.03.2019
             
Assets            
Lending to and deposits with credit institutions     - 5,111,110 - 5,111,110
Certificates and bonds     25,623,908 - - 25,623,908
Residential mortage loans     - 188,171,797 - 188,171,797
Financial derivatives     17,447,357 - - 17,447,357
Defered tax asset     - - 3,484 3,484
Other assets     - - 1,801 1,801
Total Assets     43,071,265 193,282,907 5,285 236,359,456
             
Liabilities            
Debt incurred by issuing securities     164,224,924 43,202,350 - 207,447,274
Collateral received in relation to financial derivatives     - 14,293,278 - 14,293,278
Financial derivatives     1,048,763 - - 1,048,763
Deferred taxes     - - 733 733
Taxes payable     - - 15,503 15,503
Subordinated dept     - 1,431,965 - 1,431,965
Other liabilities     - - 164,711 164,711
Total Liabilities     165,273,687 58,927,593 180,947 224,402,227
             
Total Equity     - 1,180,000 10,777,229 11,957,229
             
Total Liabilities and Equity     165,293,687 60,107,593 10,958,176 236,359,456
 

 

*Fair value calculation according to changes in market interest rates and currencies exchange rates

 


Note 13 Financial Instruments at Fair Value

Methods in order to determine fair value

General
The interest rate curve that is used as input for fair value valuations of hedging instruments and hedging objects consists of the NIBOR-curve for maturities less than one year. The swap-curve is used for maturities exceeding one year.

Interest rate and currency swaps
Valuation of interest rate swaps at fair value is done through discounting future cash flows to their present values. Valuation of currency swaps will also include the element of foreign exchange rates.

Bonds
Valuation of bonds at fair value is done through discounting future cash flows to present value.

With effect from 2009 SpareBank 1 Boligkreditt AS has implemented the changes in IFRS 7 in relation to the valuation of financial instruments as of the date of the financial accounts. The changes require a presentation of the fair value measurement for each Level. We have the following three Levels for the fair value measurement:

Level 1: Quoted price in an active market. Fair value of financial instruments which are traded in active markets are based on the market price at the balance sheet date. A market is considered to be active if the market prices are easily and readily available from an exchange, dealer, broker, industry group, pricing service or regulating authority and that these prices represent actual and regular market transactions on an arm's length basis.

Level 2: Valuation based on observable factors. Level 2 consist of instruments which are not valued based on listed prices, but where prices are indirectly observable for assets or liabilities, but also includes listed prices in not active markets.

Level 3: The valuation is based on factors that are not found in observable markets (non-observable assumptions). If valuations according to Level 1 or Level 2 are not available, valuations are based on not-observable information. The Company has a matter of principle neither assets nor liabilities which are valued at this level.

The following table presents the company’s assets and liabilities at fair value as of 31.03.2020

NOK 1 000       Level 1 Level 2 Level 3 Total
Certificates and bonds       30,106,057 8,687,386 - 38,793,444
Financial Derivatives       - 38,900,544 - 38,900,544
Total Assets       30,106,057 47,587,930 - 77,693,988
               
Debt incurred by issuing securities       - 194,190,779 - 194,190,779
Financial Derivatives       - 723,758 - 723,758
Total Liabilities       - 194,914,536 - 194,914,536
 

The following table presents the company’s assets and liabilities at fair value as of 31.03.2019

NOK 1 000       Level 1 Level 2 Level 3 Total
Certificates and bonds       17,769,351 7,854,557 - 25,623,908
Financial Derivatives       - 17,447,357 - 17,447,357
Total Assets       17,769,351 25,301,914 - 43,071,265
               
Debt incurred by issuing securities       - 164,244,924 - 164,244,924
Financial Derivatives       - 1,048,763 - 1,048,763
Total Liabilities       - 165,293,687 - 165,293,687
 

Note 14 Other Liabilities

NOK 1 000         31.03.2020 31.03.2019 2019
Employees tax deductions and other deductions         456 308 548
Employers national insurance contribution         596 583 645
Accrued holiday allowance         1,188 1,183 994
Commission payable to shareholder banks         124,185 118,922 126,813
Deposits*         3,922 425 2,471
Pension liabilities         11,633 10,711 11,383
Expected credit loss unused credit lines (flexible loans)         52   34
Other accrued costs         142,603 32,579 5,368
Total         284,635 164,711 148,256
 

 

The Company does not have an overdraft facility or a revolving credit facility as of 31.03.2020
* Deposits represents temporary balances paid in by customers in excess of the original loan amount

 


Note 15 Asset Coverage Test

The asset coverage is calculated according to the Financial Services Act § 2-31 (Covered Bond Legislation). There is a difference between this asset coverage test and the amounts in the balance sheet; for the purposes of the test mortgage loans which may have migrated above the 75% loan to value level are adjusted. Only that part of the mortgage loan corresponding to a loan to value up to 75% of the collateral is considered. Market values are used for all substitute collateral in the test. In addition any defaulted loans, i.e. loans in arrears at or beyond 90 days, are excluded from the test.

NOK 1 000         31.03.2020 31.03.2019 2019
Covered Bonds         242,915,442 207,534,245 217,833,870
Total Covered Bonds         242,915,442 207,534,245 217,833,870
Residential mortgage loans         198,214,563 186,789,041 190,250,177
Public sector, SSA bond exposure         1,208,564 2,145,109 357,901
-of which allocated to LCR         50,455 - -
Reverse repo/ depo less than 100 days         1,888,263 684,236 5,254,080
-of which allocated to LCR         - - -
Exposure to credit institutions (covered bonds)         13,094,122 14,355,785 15,521,382
-of which allocated to LCR         125,370 - -
Derivatives         38,621,328 17,023,879 15,379,500
Total Cover Pool         252,851,014 220,998,051 226,763,040
Asset-coverage         104.1 % 106.5 % 104.1 %
Cover pool including amounts allocated to LCR         253,026,839    
Assets-coverage including amounts allocated to LCR         104.2 %    
 
Liquidity Coverage Ratio (LCR)         31.03.2020 31.03.2019 2019
Liquid assets         27,574,549 7,238,905 14,680,356
Cash outflow next 30 days         11,750,954 1,953,120 12,605,694
LCR ratio         234.7 % 370.6 % 116.5 %
 
Net Stable Funding Ratio (NSFR)         31.03.2020 31.03.2019 2019
Available amount of stable funding         233,818,645 196,182,838 206,882,321
Required amount of stable funding         213,236,883 202,337,141 198,323,077
NSFR ratio         109.7 % 103.1 % 104.3 %
 

Note 16 Capital Adequacy

The primary goal for the Company's management of capital reserves is to ensure compliance with laws and regulatory requirements and maintain solid financial ratios and a high quality credit assessment in order to best support its business.

Transitional rules have been implemented by the FSA whereby regulated financial institutions with approved IRB models will not be able to fully benefit from the results of such models. Regulated entities are allowed to reduce by 20 per cent the total sum of risk weighted assets which would otherwise have been in place under the previous Basel I framework.

The European Union has approved new regulatory requirements, CRD IV, which is implemented in Norway. The requirement of 14.5 per cent total capital for SpareBank 1 Boligkreditt includes:

  • Minimum core equity Pillar 1: 4.5 per cent.
  • Additional Tier 1 equity capital 1.5 per cent. and additiponal Tier 2 capital 2.0 per cent (can be held as Tier 1 and Tier 2, alternatively as core equity capital)
  • Conservation buffer: 2.5 per cent core capital
  • Systemic risk buffer: 3 per cent. core equity
  • Countercyclical buffer: 1.0 per cent. core equity

The Issuer has an additional Pillar 2 requirement which is 0.9 per cent. core equity capital. The total requirement for the Issuer is therefore to have capital of minimum 15.4 per cent of risk weighted assets. With a management buffer added, the target for capital coverage is 15.8 per cent at at 31 March 2020.

The Company's parent banks have committed themselves to keep the Company's Equity Tier 1 capital at the minimum regulatory level (in the Shareholders Agreement). Primarily this commitment is pro rata according to the ownership stakes in the Company, but it is a joint and several undertaking if one or more ownership banks are unable to comply, up to the maximum of twice the initial pro rata amount.

Capital. NOK 1 000         31.03.2020 31.03.2019 2019
Share capital         7,610,548 7,470,548 7,610,548
Premium share fund         3,807,922 3,737,922 3,807,922
Other equity capital         -478,801 -511,486 -317,602
Common equity         10,939,669 10,696,984 11,100,868
Intangible assets         -297 -625 -379
Declared share dividend         - - -90,566
100% deduction of expected losses exceeding loss provisions IRB (CRD IV)         -403,839 -365,982 -420,879
Prudent valuation adjustment (AVA)         -18,106 -18,498 -16,639
Deferred taxes         -45,336 - -
Core equity capital         10,472,092 10,311,879 10,572,406
Hybrid bond         1,180,000 1,180,000 1,180,000
Tier 1 equity capital         11,652,092 11,491,879 11,752,406
Supplementary capital (Tier 2)         1,425,000 1,425,000 1,425,000
Total capital         13,077,092 12,916,879 13,177,406
 
Minimum requirements for capital. NOK 1 000         31.03.2020 31.03.2019 2019
Credit risk         3,887,930 3,504,996 3,711,268
Market risk         - - -
Operational risk         59,537 58,499 59,537
Depreciation on groups of loans         - - -
CVA Risk         538,319 332,820 329,561
Difference in capital requirement resulting from transitional floor         - 2,345,038 -
Minimum requirement for capital         4,485,786 6,241,353 4,100,367
 

Capital coverage

          31.03.2020 31.03.2019 2019
Risk-weighted assets incl. transitional floor*         56,072,328 78,016,911 51,254,583
               
Capital coverage (requirement w/all buffers, 16.3%)         23.32 % 16.56 % 25.71 %
Tier 1 capital coverage (requirement w/all buffers, 14.3%)         20.78 % 14.73 % 22.93 %
Core capital coverage (requirement w/all buffers, 12.8%)         18.68 % 13.22 % 20.63 %
Leverage ratio (requirement 3.0%)         4.54 % 4.99 % 5.05 %
 

* The EU capital adequacy framework (CRR/CRDIV) was incorporated into Norwegian law with effect from 31 December 2019 and the transitional floor for risk weighted assets was accordingly removed at the same time.


Note 17 Related parties

The Company has 199 687 MNOK loans to customers. These are loans acquired from shareholder banks at market values (i.e. nominal value).

SpareBank 1 SR-Bank ASA
The Company purchases a substantial amount of their support functions from SpareBank 1 SMN. A complete SLA is established between the Company and SpareBank 1 SMN.

SpareBank 1 - Alliance
In addition the Company has a Transfer and Servicing agreement in place with each individual shareholder bank regulating amongst other things the servicing of mortgage loans.

SpareBank 1 Næringskreditt AS
All employees within SpareBank 1 Boligkreditt AS are also to various degrees working for SpareBank 1 Næringskreditt AS. Twenty percent of the administrative expenses in SpareBank 1 Boligkreditt AS to be charged to SpareBank 1 Næringskreditt AS. This division of administrative expenses between the two companies reflect the actual resources utilisation in SpareBank 1 Boligkreditt AS


Note 18 Collateral received

SpareBank 1 Boligkreditt has signed ISDA-agreements including CSAs (Credit Support Annexes) with a number of financial institutions that are counterparties in interest rate and currency swaps.

These institutions post collateral in the form of cash deposits to SpareBank 1 Boligkreditt. At the end of the period 31.03.2020 this collateral amounted to NOK 27 484 million. This amount is included in the balance sheet, but represents restricted cash. According to signed ISDA and CSA agreement, it is not permitted for the parties in derivatives transactions to net amounts amongst various transactions.


Note 19 Contingencies and Events after Balance Sheet Date

 

SpareBank 1 Boligkreditt AS is not a party to any ongoing legal proceedings.

No events have taken place after the balance sheet date which are expected to have any material impact on the financial statements as of the end of the period 31.03.2020.